Paychecks from Schmidt's Bakery in Loveland bounce

State tax trouble compounded by potential for criminal complaints

Bob Schmachtenberger had already closed out an 18-year career as a baker at Schmidt's Bakery and Delicatessen in Loveland before state tax agents closed the business Jan. 8.

He had given his notice and, in the midst of packing with his wife, Charlene, for their retirement move to the Arkansas Ozarks, had collected his last paycheck for $1,338.80.

Last week's mail contained an envelope with a legal replica of the check, marked "insufficient funds."

Add bounced paychecks to the list of transgressions that the owners of Schmidt's and two Estes Park businesses are piling up.

"This isn't for me," Schmachtenberger said of his decision to make the bad check public. "It's for all the others. We're going to be fine. We're lucky. But there are a lot of other people who are really hurt by this."

Colorado revenue agents one early morning last week changed the locks at Schmidt's, Village Pizza in Estes Park and Schmidt's Aisle 2 Bakery and Bread, also in Estes Park, and posted "seized" signs on the doors.

Tax Trouble History

Loveland residents Tracy and Deb Hilker are principal owners of the three businesses, and they seemed in September 2011 to be rescuing angels when they stepped in to buy star-crossed Schmidt's from founders Harry and Charlotte Schmidt.

The seizure of the businesses last week came after Colorado tax officials had logged $128,807 in unpaid sales and wage withholding taxes for the three businesses.

And for Schmidt's, where the tab was $42,843, the state lock-up was the third in three years, the prior two occurring in March 2010 and March 2011 under the founders' ownership.

Schmachtenberger, and other employees, had weathered them all.

"We had all been through this before," he said.

He chronicled a decade of struggle for the landmark Loveland bakery and restaurant, beginning with the recession following the 9/11 terrorist attacks and continuing as Agilent Technologies Inc. shut down most of its operations on the campus across the street from Schmidt's.

'Not Alone In This'

Schmachtenberger said he had talked to many of his fellow employees whose checks, issued for pay periods prior to the business seizure, had also failed to clear the Schmidt's account at Key Bank in Estes Park.

"We're sure not alone in this," he said Monday in the kitchen of his west Loveland home, where he and his wife were surrounded by packing boxes.

Charlene Schmachtenberger, who retired Dec. 31 from her job as a business accountant, made their distinction clear: "So many of these people are literally living check to check."

For those whose checks failed to clear the bank, the blow was compounded by the fact that the lock-down of the business came on payday, meaning that checks for the most recent pay period were not distributed.

Loveland Police Chief Luke Hecker said Monday the department had yet to receive a criminal complaint against Schmidt's.

'We Will Investigate'

"We have no cases in the pipeline yet," he said. "If people choose to file complaints, we will investigate them."

Bad Check Complaints

Loveland police will investigate complaints of check fraud. Complaints can be handled in person at the Loveland Police and Courts Building, 810 E. 10th St. For information, call 962-2260.

Colorado statutes say that knowingly issuing a check on an account without sufficient funds is "fraud by check" and, if the amount exceeds $1,000, is a felony.

Tracy Hilker on Thursday said that tax agents had seized business bank accounts, and had imposed a "10-day freeze" that would prevent them from opening even if the tax bill were paid.

No such "freeze" provision exists, a Colorado Department of Revenue spokesman said last week. And, on Monday, a department spokeswoman said bank accounts had not been put under state control.

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